Leveraged Judgment
On the transformative power of leverage + good judgment, inspired by Naval Ravikant
"Give me a lever long enough and a fulcrum on which to place it, and I will move the world." - Archimedes
Leverage
I am listening to the excellent Almanack Of Naval Ravikant. Naval believes that modern society and technology permit insane leverage. I.e., small choices can get amplified manyfold to result in outsize consequences.
It's not a hard argument to buy: nearly every viral video was a small chunk of work that triggered widespread consequences.
But just because a small amount of work can trigger widespread results doesn't guarantee it will. The startup world is strewn with the bones of failed companies. The music industry is full of never-famous nobodies.
In such a leveraged world, Naval says, good judgment is key. If you are demonstrably right 10% more than your top competitor, I can load you up with capital (leverage you) and we'll make hundreds of millions.
This is why Rick Rubin is such a big deal in the music industry: his judgment seems to consistently produce hits. Indeed, Rubin himself considers his taste to be what makes him special.
Judgment
If Naval's assertion is true, then making good decisions is a huge component of being successful. Therefore, anyone who wants to be successful should study good decisionmaking.
Fortunately, we're spoiled for educational resources on this. Some of my personal favorites:
Shane Parrish's Farnam Street newsletter is dedicated to figuring out how to make better decisions. Unsurprisingly, it's been a hit with Wall Street traders. My "consistency over intensity" mantra came from here.
Nassim Taleb's books like "Fooled By Randomness", "The Black Swan", and "Antifragile" teach us how to deal with randomness, and the limits of what we can predict. Much of my worldview (and financial success) has been formed by Taleb's theory.
The Rationality movement - commonly associated with LessWrong, Eliezer Yudkowsky, and Scott Alexander's blogs (1, 2) - have a strong component of truthseeking, which is the basis for accurate decisionmaking. Concepts from Yudkowsky's "From AI To Zombies" are now a foundational part of my view of reality.
Michael Singer's "The Untethered Soul", "The Surrender Experiment", and "Living Untethered" address how our internally-experienced thoughts and emotions cloud our perception of reality. I've found these books to be transformative for dealing with the emotional side of good decisionmaking.
I did executive coaching with Ravi Raman for some years, and he stresses the importance of getting grounded before making any decisions. I use this every single day now, as I've realized how quieting the noise can clear up judgment for making that one great decision with outsized impact.
I consumed all the above resources before I started the "Almanack Of Naval Ravikant". Yet only now, with Naval's thoughts on leverage, am I realizing that I need to revisit them because they're even more powerful than I realized.
I used to think of these resources' philosophies as things to consider in your life as you go about your daily work.
Now, I'm realizing they might be THE work: if you get the concepts of good decisionmaking down and leverage correctly, you can remove the necessity for hundreds of hours of labor.
To see this in practice, some examples:
A single smart financial bet can create levels of wealth where you never need to work again (this is a very Nassim Taleb idea)
Conversely, avoiding one bad financial decision can be the difference between going bankrupt and staying solvent (again, a Taleb idea)
Understanding the importance of making financial bets at all (rather than keeping your money in a savings account) can be the difference between wealth and a lifetime of work
Good investment deals commonly need to be acted on in a very short timeframe, and understanding the nature of risk-taking (when should you move fast vs slow?) allows you to capture value from good deals intelligently
Internalizing the lessons of this post (the importance of leverage & decisionmaking, conveyed from Naval Ravikant) will itself upgrade your decisionmaking by triggering you to seek out still-better decisionmaking and leveraged opportunities
If you understand leverage and hire someone to do your laundry, even if you only do 1 hour of laundry per week, you save 3,120 hours (130 days, or 4.3 months) over 60 years of adult life
Understanding the importance of automation (basically computers, including ChatGPT) is the difference between hundreds of hours of manual labor vs automating it
Final Thoughts
If these are ideas are interesting to you, some ways to implement them in your own life:
Ask yourself, "Am I working smart instead of hard?" I.e., are you operating on autopilot, or are you actively seeking ways to leverage your judgment?
Consider what things in your life you can outsource or automate to get back more time and energy (for extra leverage, tell ChatGPT what you do on a weekly basis and ask it to help).
Invest in upgrading your decisionmaking:
Understand negative leverage and how to avoid it
Read the Almanack Of Naval Ravikant
Subscribe to Shane Parrish's Farnam Street newsletter
Read Ramit Sethi's I Will Teach You To Be Rich
Read Nassim Taleb's Fooled By Randomness and The Black Swan
Understand the map/territory distinction
Thanks for the shout out Kevin!
I love this theme about the power of decisions. There are key moments in life and work where an ability to have choice without struggle is a superpower.
The human mind naturally and effortlessly makes remarkably complex decisions, but far too many have forgotten this capability. Getting in touch with it is really transformative.
Looking forward to following more of your writing here.